Borrowing constraints and complex dynamics in an OLG framework

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In this paper we model an OLG economy à la Kiyotaki and Moore whose novel feature is the role of money as a store of value and of bequest as a source of funds to be "invested" in landholding. The dynamics generated by the model are generally characterized by irregular cyclical trajectories and, under special configuration of the parameters, a strange attractor appears. In this setting, an expansionary monetary policy may have a stabilizing role due to the interaction between money holding and the accumulation of borrowers' net worth.
Original languageEnglish
JournalJournal of Economic Behavior & Organization
Volume72
Issue number2
Pages (from-to)656-669
Number of pages14
ISSN0167-2681
DOIs
Publication statusPublished - 2009

ID: 15999517